Prepared by: Trish Wetterberg

PREPARED FOR: VIATEC September 2014

ECONOMIC IMPACT OF THE GREATER VICTORIA TECHNOLOGY SECTOR

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TABLE OF CONTENTS

List of Figures ....................................................................................................................................... 2

1 Executive Summary ...................................................................................................................... 3

2 Background .................................................................................................................................. 5

3 Methodology ................................................................................................................................ 5

4 Economic Impact of the Greater Victoria Tech Sector ................................................................... 6

4.1 Direct Impact ........................................................................................................................ 6

4.1.1 Business Counts ............................................................................................................. 7

4.1.2 Average Revenues ......................................................................................................... 7

4.1.3 Direct Impact Calculations ............................................................................................. 9

4.2 Indirect Impact ...................................................................................................................... 9

4.3 Total Economic Impact ........................................................................................................ 10

5 Tech Sector Profile ...................................................................................................................... 12

5.1 Business Structure .............................................................................................................. 12

5.2 Revenues & Expenditures ................................................................................................... 18

5.3 Employees .......................................................................................................................... 21

5.4 Greater Victoria Tech Sector Advantages & Challenges ..................................................... 23

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LIST OF FIGURES

Figure 1 - Business Counts for Capital Region ....................................................................................... 7 Figure 2 - Estimated Revenues from Non-Survey Respondents ............................................................. 8 Figure 3 Direct Impact ....................................................................................................................... 9 Figure 4 Multipliers ......................................................................................................................... 10 Figure 5 Indirect Impact ................................................................................................................... 10 Figure 6 Total Economic Impact ....................................................................................................... 10 Figure 7 Comparison of Results ....................................................................................................... 11 Figure 8 - Number of Years in Business (n=123) .................................................................................. 12 Figure 9 - Primary Business Sector (n= 123) ........................................................................................ 13 Figure 10 Technology Software & Services - Sub-Sector Composition .............................................. 14 Figure 11 New Media & Internet Technology - Sub-Sector Composition .......................................... 14 Figure 12 Environmental Technology - Sub-Sector Composition ....................................................... 15 Figure 13 Life Sciences & Biotech - Sub-Sector Composition ............................................................ 15 Figure 14 Electronics & Peripherals - Sub-Sector Composition ........................................................ 16 Figure 15 Telecom & Wireless - Sub-Sector Composition ................................................................ 16 Figure 16 - Aviation & Aerospace - Sub-Sector Composition ............................................................... 17 Figure 17 - Actual & Projected Revenues - 2012-2014 ......................................................................... 18 Figure 18 Expenditures - 2012-2013 ................................................................................................. 19 Figure 19 - Percentage of 2013 Sales by Region (n=110) ..................................................................... 20 Figure 20 Average Number of Employees (n=110) ........................................................................... 21 Figure 21 - Number of Employees by Category (n=110) ...................................................................... 22 Figure 22 - Projected Change in Workforce - Next Two Years (n=110) ................................................. 22 Figure 23 - Advantages of Doing Business in Greater Victoria (n=104) ................................................ 23 Figure 24 - Challenges of Doing Business in Greater Victoria (n=104) .................................................. 24

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1 EXECUTIVE SUMMARY In support of its mandate to serve as the primary promoter and definitive source of information on the local technology sector, VIATeC commissioned this study to perform an economic impact assessment of the Greater Victoria tech sector. To gather the required data to form the basis for this analysis, and create a profile of the local tech sector, Victoria technology companies were invited to participate in an online survey that gathered information about business structure, revenues and expenditures and employees.

Economic Impact Assessment

Based on the analysis of data from the Profile of British Columbias High Technology Sector report and the survey undertaken by VIATeC, the overall contribution of the technology sector to the Greater Victoria economy is estimated as follows:

The direct impact - representing the total output (revenues) directly generated by companies in the sector is estimated at $3.15 billion.

The indirect impact - representing the impact of those businesses who supply inputs to the technology sector is estimated at $876 million.

Combined, the total economic impact of the high technology sector within the Greater Victoria region is estimated to be $4.03 billion.

The results show that the Greater Victoria technology sector continues to demonstrate strong growth, with industry revenues (direct impact) growing 62% over 2009 estimates:

$1.00

$1.60 $1.95

$3.15

2004 2007 2009 2014

Direct Impact of Greater Victoria Tech Sector (billions)

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Tech Sector Profile Highlights

The majority of companies (72%) responding to the survey had been in operation for more than 5 years, while just 14% were in the early stages (2 years or less in business).

Just over four in five companies were concentrated within two sectors, Technology Software & Services (55%) and New Media & Internet Technology (27%).

Of those with Technology Software & Services as a primary line of business, software and application development, IT consulting and other IT services and mobile application development were the most prevalent sub-sectors.

Among the companies working in New Media & Internet Technology, web design and development, consulting services (including social media) and advertising services were the most common areas of work.

Of the responding companies, average revenues in 2013 were $5.07 million, up 15% from 2012 estimates of $4.4 million. Companies are predicting a more modest 6% growth into 2014, with revenues estimated to reach $5.4 million.

Companies responding to the survey had an average of 35 full-time employees and 2 part-time employees and the majority of employees (82%) are located in Greater Victoria. Interestingly, three in five companies had used at least one contractor in 2013. Half of the companies expect employee count growth between 1-50% over the next two years, while about a quarter believe their workforce will stay the same.

Asked to describe the advantages of doing business in Greater Victoria, companies overwhelmingly named the lifestyle here as a key feature. The beauty, climate, activities and amenities all contribute to a good work/life balance.

A significant number also noted access to talent as an advantage (both attracting and retaining it), citing the availability of both experienced workers and qualified new graduates from local post-secondary institutions. The supportive tech community was also mentioned by several respondents.

In terms of challenges, almost two in five mentioned travel time and costs, for both frequent travel to the Lower Mainland as well as the logistics involved in connecting with clients outside of BC.

Although many saw access to talent as a positive in Victoria, an almost equal number saw it as a challenge. Issues included finding people with specialized skill sets, and significant competition from other local companies in acquiring desired candidates. Other challenges included the high cost of living and high operating costs.

Overall, the Greater Victoria technology sector continues to demonstrate a strong track record of growth and results from this study further confirm the importance of this industry to the local economy.

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2 BACKGROUND VIATeCs mission is to serve as the one-stop hub that connects people, knowledge and resources to grow and promote the Greater Victoria technology sector. One of VIATeCs key focus areas is to serve as the primary promoter and definitive source of information on the local technology sector.

As part of this mandate, VIATeC conducts economic impact studies, with the last one completed in 2009. These studies help VIATeC gain a better understanding of size of the technology sector and more effectively promote and showcase what the sector contributes to this region. This, in turn, helps VIATeC attract new talent and potential investors, and gain the attention of policy makers and the media.

Given the significant growth of the sector in recent years, VIATeC commissioned an updated economic impact study.

3 METHODOLOGY In order to gather the base data for the economic impact calculations, an online survey (via SurveyMonkey) was developed, covering the following topics:

Business structure years in operation, industry sector Revenues and expenditures Employment number of employees and expected growth Advantages and challenges of conducting business in the region

The survey launched on May 27, 2014 to 244 VIATeC members and 436 non-members within the Greater Victoria tech community sourced from VIATeCs database. The survey ran until August 22, 2014, with multiple reminders being sent to encourage response.

A total of 123 companies provided complete (110) or partial (13 provided all data up to and including revenues) data sets and were used in the analysis, giving a response rate of 18%. Margin of error on this sample size is 8.2% (19 times out of 20). All data was reviewed and cleaned to ensure that responses were appropriate to the questions and outliers were considered. As such, sample sizes for each question will vary and are noted for each chart or table.

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4 ECONOMIC IMPACT OF THE GREATER VICTORIA TECH SECTOR A good starting point for this analysis is to review the health of the high technology sector in British Columbia as a whole. And the sector is indeed in good health, with increases experienced in almost all key indicators in 2012. The following are key highlights from the 2013 edition of the Profile of British Columbias High Technology Sector1:

The high technology sector contributed 7.6% of the provinces GDP in 2012. High tech GDP saw its third consecutive year of growth, increasing 3.4% in 2012, double the rate of GDP growth in the province as a whole.

High technology sector revenues also increased in 2012, up 3.5% to $23.2 billion. Only one key indicator saw a decline in 2012, with employment dipping slightly by 0.2% to

84,070. Overall, the high tech sector employed 4.3% of BCs work force in 2012. Aggregate wages and salaries increased by 7.7% in 2012, with high tech employees earning an

average of $1,440 per week (substantially higher than the provincial average of $870). There were 9,010 high tech sector businesses with employees in 2012, up 2.9% from the

previous year.

The report points to a robust and dynamic sector with a track record of strong growth. This section will now detail the calculations used to determine the Greater Victoria tech sectors contribution to the region.

4.1 DIRECT IMPACT

As outlined, the survey gathered 123 complete or partial responses used in the analysis. Once data was reviewed for any inconsistencies/abnormalities, we were able to use 2013 revenue data from 116 of the responding companies. In addition to data from the Economic Impact survey, additional revenue data was collected from another VIATeC study which was in field during a similar timeframe (2014 HR Practices & Compensation Study). Revenue data from an additional 26 companies was collected and is also used in this economic impact analysis. The data from these 142 companies (116 + 26) and its extrapolation to the total estimated Greater Victoria tech sector forms the basis of the analysis.

The direct impact of the Greater Victoria tech sector, in our analysis, will represent the total estimated output (revenues) directly generated by companies in the sector. To calculate this, we must use available information to estimate both business counts and average revenues per business.

1 Profile of British Columbias High Technology Sector, BC Stats, 2013; http://www.bcstats.gov.bc.ca/publications/infoline/14-04-03/Profile_of_the_British_Columbia_High_Technology_Sector_2013_Edition.aspx

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4.1.1 Business Counts

Although VIATeC did complete a thorough census of technology companies in early 2014, we used business count information from the Profile of British Columbias High Technology Sector report. For the Capital region, the total count of businesses with employees in the technology sector was estimated to be 884.

Figure 1 - Business Counts for Capital Region

Region Business Count Capital Region 884

It must be considered that this count covers only businesses with employees. The Profile of British Columbias High Technology Sector report estimates that for every business with employees there are 3.44 people self-employed in the sector2. Using this ratio we can then expect that in the Greater Victoria region, a further 3,041 people (884*3.44) are self-employed in the sector.

4.1.2 Average Revenues

The survey data revealed that, of the companies included in the analysis, average revenues/company for 2013 were $5,066,407. Revenues from some companies were found to be significant outliers and were not included in this average revenue calculation though they are considered valid and are included in the overall direct impact calculation to follow. Total revenues generated by companies responding to the survey was $1,549,143,788.

It was anticipated that the companies responding to this survey were larger than the average technology company in the region. In fact, when we compared the respondent breakdown by employee size category to the estimated breakdown on a province-wide basis, companies of a smaller size (1-4 employees) were under-represented among survey respondents. For example, BC Stats estimates that, provincially, 69% of tech companies have 1-4 employees. Among companies included in the economic impact analysis (for which employee count data was available), only 27% were in this category. This was an important consideration in how the survey results could be extrapolated to the remaining tech companies in Victoria (884 companies in Capital region 142 survey respondents = 742 remaining companies).

To reflect the local Victoria market, an average of BC Stats provincial data and the VIATeC census data was used to estimate the proportion of companies by employee size category (i.e., what percentage of companies would have 1-4 employees, 5-9 employees, etc.).

These proportions were then applied to the 742 remaining companies (i.e., of the 742 companies, how many would we expect to have 1-4 employees, 5-9 employees, etc.) to derive the breakdown by employee size category seen in the following table.

2 Estimated self-employed in BC tech sector 31,036 / total businesses with employees 9,010 = 3.44

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Figure 2 - Estimated Revenues from Non-Survey Respondents

Employee Size Category Estimated Count of

Companies by Category Estimated Avg. Rev/Company

by Category* Total Revenues 1 to 4 414 $ 290,215 $ 120,292,480 5 to 9 128 $ 469,662 $ 59,914,526 10 to 19 111 $ 2,236,267 $ 249,177,662 20 to 49 58 $ 4,157,142 $ 241,363,531 50 plus 30 $ 23,321,170 $ 710,151,806 742 Total Revenues

$ 1,380,900,005

Avg. Revenue/Company $ 1,861,051 * Calculated from Economic Impact Survey data

These counts were then multiplied by the average revenues/company by employee size category that were derived from the survey data (e.g., a company of 1-4 employees had average revenues of $290,215).

Based on these calculations, the remaining 742 companies were estimated to generate $1.38 billion in revenues, for an average revenue/company of $1,861,051. This is believed to be a realistic and conservative estimate. As a comparison point, provincial average revenues/company are estimated at $2,577,358 (from the Profile of British Columbias High Technology Sector), substantially higher than the figure being employed in this analysis.

Regarding those who are self-employed, an estimate of their average annual revenues was also generated from the survey data. Among those who listed no full-time or part-time employees, average revenues for 2013 were $72,800.

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4.1.3 Direct Impact Calculat ions

Using the business counts and revenue estimates described in the previous sections, the estimated direct impact of the Greater Victoria technology sector is as follows:

Figure 3 Direct Impact

DIRECT IMPACT Companies with employees Total revenues from survey respondents (142 companies) $ 1,549,143,788 Estimated revenues from non-responding companies (742 companies) $ 1,380,900,005

Total Revenues - Companies with Employees $ 2,930,043,793

Self-employed Estimated Number of Self-employed (884*3.44) 3,041

Avg. revenues/Self-employed $ 72,800

Total Revenues - Self-employed $ 221,381,888

Total Direct Impact $ 3,151,425,681

4.2 INDIRECT IMPACT

The indirect impact represents the impact of tech sector activity on industries farther back in the supply chain (that is, those who supply inputs to the technology sector). To estimate the indirect impact, we employed the use of 2010 multipliers for BC that were supplied by StatsCanada and followed the methodology described in BC Stats document British Columbia Provincial Economic Multipliers and How to Use Them3 (updated March 2008).

The high technology sector is divided into two larger categories by BC Stats manufacturing and services. As such, multipliers corresponding to each of these sub-sectors should be employed. The corresponding multipliers with the best alignment to each of these categories is as follows:

Manufacturing - medium aggregation category multiplier for Electronic Product Manufacturing = 0.25

Services small aggregation category for Information and Cultural Industries (which includes information services and data processing as well as telecommunications) = 0.28

3 British Columbia Provincial Economic Multipliers and How to Use Them, BC Stats, updated March 2008; http://bcstats.gov.bc.ca/StatisticsBySubject/Economy/BCInputOutputModel.aspx

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The Profile of British Columbias High Technology Sector report provides a count of high technology businesses in the Capital region that are in manufacturing vs. services. Using these counts, we can calculate a weighted average multiplier for overall use:

Figure 4 Multipliers

Business Counts % of Businesses Multiplier Manufacturing 57 6% 0.25 Services 827 94% 0.28 Total 884 Weighted average multiplier = (6% * 0.25) + (94% * 0.28) 0.28

Using this multiplier, the indirect impact is estimated to be:

Figure 5 Indirect Impact

Direct Impact Multiplier Indirect Impact Total Revenues $ 3,151,425,681 0.28 $876,303,107

4.3 TOTAL ECONOMIC IMPACT

Adding together the direct and indirect impacts of the Greater Victoria technology sector, the estimated total economic impact of the sector in 2013 is estimated to be $4.03 billion.

Figure 6 Total Economic Impact

Estimated Direct Impact $ 3,151,425,681 Estimated Indirect Impact $876,303,107 Total Economic Impact $4,027,728,788

This is believed to be a conservative estimate of the value of the tech sector. The following table outlines a comparison of economic impact results using the survey-based average revenues/company, the average revenues/company sourced from BC Stats and the average revenues/company figure of $1,861,051 that was ultimately used in this analysis. The comparison shows that using other data would have resulted in a much more inflated figure. In addition, revenue data from VIATeCs tech sector census would also suggest that the calculated direct impact paints a realistic picture of the industrys 2013 revenue base.

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Figure 7 Comparison of Results

Estimate with Survey-Based Avg. Revenues

Estimate with BC Stats Provincial Avg.

Revenues Final VIATeC Estimate

Companies with Employees Total revenues from survey respondents (142 companies) $ 1,549,143,788 $ 1,549,143,788 $ 1,549,143,788 Remaining companies (884 - 142) 742 742 742 Average revenues/company $ 5,066,407 $ 2,577,358 $ 1,861,051 Estimated revenues from non-responding companies (742 companies) $ 3,759,273,645 $ 1,912,399,636 $ 1,380,900,005 Total Revenues - Companies with Employees $ 5,308,417,433 $ 3,461,543,424 $ 2,930,043,793 Self-employed Estimated Number of Self-employed (884*3.44) 3041 3041 3041 Average revenues/self-employed $ 72,800 $ 72,800 $ 72,800 Total Revenues - Self-employed $ 221,381,888 $ 221,381,888 $ 221,381,888 Total Direct Impact $ 5,529,799,321 $ 3,682,925,312 $ 3,151,425,681 Multiplier 0.28 0.28 0.28 Total Direct + Indirect $ 7,067,446,347 $ 4,707,020,189 $ 4,027,728,788

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5 TECH SECTOR PROFILE

5.1 BUSINESS STRUCTURE

Among responding companies, the majority (72%) were relatively mature, having been in business in excess of 5 years. Only 3% had been in business for less than a year.

Figure 8 - Number of Years in Business (n=123)

9%

17%

31%

15%

13%

11%

3%

More than 30

21 to 30

11 to 20

6 to 10

3 to 5

1 to 2

Less than a year

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In terms sectors within the tech industry, of the companies that responded to the survey, 37% said that Technology Software and Services was their dominant primary sector (i.e., the sector that generates the most revenue for their company). An additional 18% indicated it was also a key sector in which they operated, for a combined total of 55% of companies indicating this as a primary sector.

New Media and Internet Technology followed as the next most represented sector, with 23% claiming it as their dominant line of business, and an additional 4% also saying it is a key component of their operations (for a total of 27%).

Figure 9 - Primary Business Sector (n= 123)

Just over one in ten companies overall (dominant + other primary) gave Environmental Technology as primary sector. This was followed closely by Life Sciences and Biotech and Electronics and Peripherals. Very few responding companies were in the Telecom and Wireless or Aviation and Aerospace sectors.

For each primary sector, respondents were asked to identify the sub-sector(s) that formed part of their business. The following tables present the combined count of companies operating in that sub-sector (whether the primary sector was dominant or other), and what that count translates to in terms of the percentage of companies within that sector and the percentage of total responding companies. Note that many sector categories have very small sample sizes and therefore results should be interpreted with caution.

7%

2%

5%

7%

8%

12%

23%

37%

4%

2%

2%

2%

2%

4%

18%

Other

Avianon and Aerospace

Telecom and Wireless

Electronics and Peripherals

Life Sciences and Biotech

Environmental Technology

New Media and Internet Technology

Technology Sooware and Services

Dominant Primary Sector Other Primary Sector

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Figure 10 Technology Software & Services - Sub-Sector Composition

TECHNOLOGY SOFTWARE & SERVICES

COUNT % of Primary Sector (n=68)

% Overall (n=123)

Software and Application Development 47 69% 38% IT Consulting Services 25 37% 20% IT Services 21 31% 17% Mobile Application Development 19 28% 15% Data Processing and Management 18 26% 15% Security and Protection Services 12 18% 10% Graphic Design 10 15% 8% IT Training 9 13% 7% Engineering Design/Services 7 10% 6% GIS/Mapping 7 10% 6% Public Sector (defence, oil, gas) 7 10% 6% Other 2 3% 2%

Within the Technology Software and Services category, the majority (69%) of companies in this category indicated that they were involved in software and application development (with 28% saying they work specifically in mobile application development). Almost two in five worked in the IT consulting services space while just under a third were in IT services.

Figure 11 New Media & Internet Technology - Sub-Sector Composition

NEW MEDIA & INTERNET TECHNOLOGY

COUNT % of Primary Sector (n=33)

% Overall (n=123)

Web Design and Development 16 48% 13% Consulting Services (including Social Media) 12 36% 10% Advertising Services 10 30% 8% E-commerce 9 27% 7% Other Media/Online Services 9 27% 7% Web Hosting Services 7 21% 6% Social Media Platform Development 6 18% 5% Gaming 4 12% 3% Interactive Media 4 12% 3% E-Learning 2 6% 2% Event Media Services 1 3% 1% Other 2 6% 2%

Within New Media and Internet Technology, 48% of companies operating in that primary sector were involved web design and development. Just over a third offered consulting services, while three in ten were in advertising. A variety of other sub-sectors were also represented among survey respondents.

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Figure 12 Environmental Technology - Sub-Sector Composition

ENVIRONMENTAL TECHNOLOGY COUNT % of Primary Sector (n=18*)

% Overall (n=123)

Environmental Services 8 44% 7% Scientific Consulting Services 6 33% 5% Alternative Energy/Clean Tech 5 28% 4% Natural Resources Management 4 22% 3% Ocean Sciences and Marine Technology 3 17% 2% Energy Technology 2 11% 2% Chemical Manufacturing 1 6% 1% Research Centre 1 6% 1%

*small base size, interpret with caution

Of the smaller number of companies operating in the Environmental Technology sector, most were involved in environmental services, scientific consulting services and alternative energy/clean tech.

Figure 13 Life Sciences & Biotech - Sub-Sector Composition

LIFE SCIENCES & BIOTECH

COUNT % of Primary Sector (n=12*)

% Overall (n=123)

Medical Information Systems 4 33% 3% Antibody Development 2 17% 2% Medical Devices 2 17% 2% Reagents/Kits 2 17% 2% Biotechnical Research 1 8% 1% Data Management 1 8% 1% Pharmaceuticals 1 8% 1% Other 1 8% 1%

*very small base size, interpret with caution

Of the few companies involved in the Life Sciences and Biotech primary sector, medical information systems was most frequently noted, although companies in this sector covered a variety of areas within this field.

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Figure 14 Electronics & Peripherals - Sub-Sector Composition

ELECTRONICS & PERIPHERALS COUNT % of Primary Sector (n=11*)

% Overall (n=123)

Other Electronic Equipment and Instruments 4 36% 3% PC Hardware and Peripherals 4 36% 3% Communications Equipment and Supplies 2 18% 2% Building Automation and Controls 1 9% 1% Lighting 1 9% 1% Office Electronics 1 9% 1% Retail/Supermarket 1 9% 1% Transportation Equipment and Instruments 1 9% 1% Other 2 18% 2%

*very small base size, interpret with caution

Of the eleven companies operating in Electronics and Peripherals, most were operating in other electronic equipment and instruments and PC hardware and peripherals.

Figure 15 Telecom & Wireless - Sub-Sector Composition

TELECOM & WIRELESS

COUNT % of Primary Sector (n=8*)

% Overall (n=123)

Network Service Provider 5 63% 4% Mobile Communications 3 38% 2% Other Communication Services 3 38% 2% Telecommunications Network Integration 3 38% 2% Broadband Hardware Manufacturer 2 25% 2% Web/Audio/Video Conferencing 2 25% 2% Other 1 13% 1%

*very small base size, interpret with caution

Of the few responding companies in the Telecom and Wireless primary sector, five out of the eight were network service providers.

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Figure 16 - Aviation & Aerospace - Sub-Sector Composition

AVIATION & AEROSPACE

COUNT % of Primary Sector (n=3*)

% Overall (n=123)

Education and Training 1 33% 1% Measuring, Controlling and Testing Devices 1 33% 1% Aircraft Manufacturer

Airfield Lighting

Flight Data Services

Other 1 33% 1% *very small base size, interpret with caution

Only three companies indicated Aviation and Aerospace as a primary sector and were involved in three different areas.

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5.2 REVENUES & EXPENDITURES

Survey respondents were asked to provide actual revenues for 2012 and 2013 and to project revenues for 2014. The revenue figures provided by each respondent were reviewed with VIATeC and any inconsistent data was removed from the average revenue calculations, as were outliers that would have significantly skewed the results.

Figure 17 - Actual & Projected Revenues - 2012-2014

*excluding outliers and including data from 2014 HR Practices & Compensation Study

Among responding companies, 2013 average revenues were $5,066,407, a 15% growth over 2012 revenues of $4,409,391. Average revenues were projected to grow 6% in 2014 to $5,375,906.

$5,375,906

$5,066,407

$4,409,391

2014 projected (n=133*)

2013 (n=136*)

2012 (n=134*)

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Looking at expenditures, the 2012 average was $3,226,544, with expenditures growing by 11% in 2013 to just over $3.5 million. It was estimated that 58% of those expenditures went to employee payroll and contractors fees.

Figure 18 Expenditures - 2012-2013

*excluding outliers and including data from 2014 HR Practices & Compensation Study

$3,579,662

$3,226,544

2013 (n=116*)

2012 (n=115*)

58% of Expenditures went to Employee

Payroll

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Of the companies surveyed, an average of almost half of their 2013 sales (48%) came from within British Columbia, while 13% were from the rest of Canada. Of the 39% of sales generated outside of Canada, most were from the United States.

Figure 19 - Percentage of 2013 Sales by Region (n=110)

48%

13%

26%

6% 3% 4%

Brinsh Columbia The rest of Canada United States Europe Asia Other

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5.3 EMPLOYEES

Among the responding companies, the average number of full-time employees was 35, with an additional average of 2 part-time employees and 5 contractors/freelancers. Very few companies had interns or non-paid staff, therefore the average is not reported here.

Figure 20 Average Number of Employees (n=110)

Three in five companies responding to the survey had used at least one contractor or freelancer in 2013, a significant number that suggests this is a common method of filling staffing needs in the tech sector in this region.

The majority of employees are located in the Greater Victoria region.

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2

35

Contractors/Freelancers

Part-Time

Full-Time

82% of full-time and part-time employees are located in the Greater

Victoria area

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Overall, most responding companies are relatively small, with 38% having between 1 to 4 employees and 23% with 5 to 9 employees. A quarter of companies had 20 employees or more.

Figure 21 - Number of Employees by Category (n=110)

A third of companies were cautiously optimistic about employee growth in the next two years, expecting their workforce to grow by 1 to 20%. A further 17% predicted growth from 21-50% while a similar number expected growth in excess of 50%. About a quarter expected their employee count to remain the same, while only 4% predicted a decline in workforce.

Figure 22 - Projected Change in Workforce - Next Two Years (n=110)

17%

8%

14%

23%

38%

50 or more

20 to 49

10 to 19

5 to 9

1 to 4

3%

8%

5%

6%

17%

33%

24%

2%

2%

Not sure/cant predict

Increase by more than 100%

Increase by 100%/Double

Increase by 51-99%

Increase by 21-50%

Increase by 1-20%

Remain relanvely the same

Decrease by 1-20%

Decrease by more than 20%

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5.4 GREATER VICTORIA TECH SECTOR ADVANTAGES & CHALLENGES

Respondents were asked to describe the biggest advantages and the biggest challenges to doing business in the Greater Victoria region. The following graphics summarize the key findings.

The lifestyle enjoyed in Victoria was by far the most commonly noted perceived advantage. Half of respondents praise the region for the quality of life it offers for business owners and employees, including its beauty, the mild climate, outdoor activities, restaurants, arts/culture, and short commute times. Several noted that these elements also make it attractive for clients to visit.

Figure 23 - Advantages of Doing Business in Greater Victoria (n=104)

About a quarter of companies said that their access to talent (and ability to attract and retain it) was an advantage of doing business in Greater Victoria. This includes access to graduates from local post-secondary institutions, and having a skilled pool of more experienced employees to draw from. The lifestyle and affordability (relative to other larger tech centres) were seen as factors that make it easier to attract and gain loyalty from employees.

The supportive tech community was also mentioned as an advantage by 15% of respondents, in terms of fostering growth and developing connections in the industry. Another key advantage was proximity to the government, among those who have it as a client.

Victoria is a beautiful place with good work-life balance

Supportive high tech community fosters growth and contacts with other like-minded companies and start-ups.

Easy access to quality talent pool of business and technical staff.

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Among the perceived challenges of doing business in Greater Victoria, almost two in five companies mentioned some aspect of travel, whether that be travel time, travel costs or distance to their clients. This included traveling to the Lower Mainland as well as connecting with clients and doing business across North America.

Figure 24 - Challenges of Doing Business in Greater Victoria (n=104)

And while a quarter of respondents saw access to talent as an advantage, a slightly smaller number (17%) felt it was actually a challenge. Some noted the difficulty in fulfilling specific skill sets (e.g. software developers), while others felt there were qualified staff, just significant local competition in acquiring that talent.

A similar number of companies (15%) saw the small local client base (small in number and size of business) to be a drawback of operating in Greater Victoria.

Other commonly noted challenges included the high cost of living, as well as high business operating costs outside of travel costs (including property purchase/rent/taxes and shipping costs).

Traveling to meetings and tradeshows is more complicated/expensive/time consuming than on the Mainland.

Competition for hiring, every company is trying to attract the same people (tech &

business).

Lack of large clients locally, much of revenue comes from off-island